Q:

what is the difference beetwen standard cost estimate and preliminary cost estimate for the product cost collector in repetitive mfg. what effect each of the above makes to Production , consumption ,sales enrtry related to product if standard cost estimate OR preliminary cost estimate is selected in REM.

A:
in the REM profile, 1.If you select the radio button for post activities and backflush using std.cost estimate of the material means you have to carryout costing run in CK40N and the confirmation will be made as per the std.cost estimate of the material.Without carrying out the costing run you cannot carryout MFBF for that material. 2.If you select the radio button for the second option backflush using the preliminary.costing data from the product cost collector,then while creating the product cost collector preliminary costing will be done and based on these values you can carryout MFBF and no need to carryout CK40N for that material. It depends on your business requirement which one will be suitable for you. 1. If you are going with standard cost estimate means then whatever the materials and the operations that were present at the time of cost estimate will be considered and booking will be done based on those values,say For Eg at the time of cost estimate your Finished product was having 2 BOM components and then at one stage in the mid of the month one more component was added in the BOM, now you cannot take a fresh cost rollup in the mid of the month,so for this you have to goto KKF6N-->click on change mode and then click on cost icon and then save the datas and then you can carryout the confirmations in MFBF.This newly added component's cost will be considered during the next cost rollup. 2. If you are going for based on preliminary cost estimate,then whenever there's a BOM or operation change,directly you can goto KKF6N to make the changes effective and carryout confirmation. 3.For Costing reports as per my knowledge level standard cost estimate will help you to get the exact datas. 4.You can use this second option(pre.Costing data from the Product cost collector) for those materials which has 2 production versions and you can create 2 REM profile one with std.cost estimate and the second one with pre.costing. and change the REM profile as and when required. Standard cost estimate is a tool for establishing prices for materials. It is used to calculate the costs of goods manufactured and the costs of goods sold for each product unit. In order to establish the cost estimate with quantity structure of a material, the bills of materials and routing of the material must exists for the materials to be costed. The cost estimate with quantity structure uses the material master data to determine the material consumption and internal activities required to produce the product. Costing calculates the cost of goods manufactured for each material made in-house in the BOM structure. Preliminary cost estimate is done in planning cost stage so as to know how much we need to produce the materials. This is as good as planned cost and once the production is finished, the Standard cost estimate is done periodically to update the finished material price in the materials master. Whereas SAP provides in built facility of mixed costing by entering mixed ratio for production versions. In order to utilize this, REM backflush is to be done using data from the preliminary cost estimate of the production version. Postings will be done with the data available in the preliminary cost estimate but the material can have a standard cost estimate which will have a weighted average cost estimate depending upon the mixed ratio of the production version maintained for the material. Main advantage of using mixed costing is, it can valuate in-house manufactured inventory with precise costing and update stock values in balance sheet. Please find below salient features of each of the cost estimate: 1. Standard Cost Estimate - This is the cost done for updating the manufacturing cost of the material in the material master. this will be one of the basis for valuation of inventory. This is required irrespective of whether we are in REM scenario or Descrete scenario 2. Preliminary Cost Estimate - This is normally used for calculation of target costs. Target costs are very important for calculation of WIP and Scrap. Without Target costs, we cannot do the settlement of any Product Cost Collector. alternatively we can define that Standard cost can be considered for Calculation of Target costs. it all depends on the business requirement of the client. Preliminary cost estimate is required only in case of Repetittive scenario (not in Descrete scenario). In repetitive scenarios for all the Finished, Semi-finished products for which we are going to have Product Cost Collector (in REM for all HALB and FERT materials we will have Product Cost Collector). So for all the product cost collectors Preliminary cost estimate is required to be done